California dairies find going 'green' expensive

California's new greenhouse rules offer dairies two reasons to be thankful -- an exemption from the limits and a chance to make money by voluntarily cutting back climate-warming methane.

But industry officials say it's unlikely that many dairies will get involved because it's too expensive to build a methane-capturing system.

"It's got to pay for it to work," says Michael Marsh, chief executive officer of Western United Dairymen, representing 1,000 dairies in the state. "We don't think it does."

It's one of the growing pains for California's newly approved cap-and-trade program, which is supposed to drop greenhouse gas emissions to 1990 levels by the end of this decade.

This is the nation's first big push to limit climate-warming gases, such as carbon dioxide and methane. The entire country is watching to see how this works out.

California will set a cap, or limit, on greenhouse gases that refineries, power plants and other businesses are allowed to release. If companies can't get under the cap, they can buy allowances from companies that have made extra reductions.

Beyond the allowances, credits or offsets can come from dairies, which are exempt from the cap but encouraged to cut back to create a backlog of reductions. Dairies emit 2% of such gases in the state and regulating them would be too difficult at this point, state officials said.